How many Americans live in poverty? Why would a prosperous nation have impoverished people?<\/p>\n\n\n\n
Poverty, by America<\/em> by Matthew Desmond contends that the United States has a big problem. Despite the country’s vast wealth and prosperity, it suffers from a level of poverty and inequality<\/a> unseen anywhere else in the developed world.<\/p>\n\n\n\n Continue reading for an overview of this new book.<\/p>\n\n\n\n\n\n\n\n According to Poverty, by America<\/a><\/em> by Matthew Desmond, one in nine Americans and one in eight children live in poverty (defined by the US federal government in 2023<\/a> as an individual earning less than $14,580 per year or less than $30,000 for a family of four). Desmond writes that a smaller\u2014but still shockingly high\u2014number of Americans live in deep <\/em>poverty, on par with the poverty of the poorest people in developing nations like India or Bangladesh.<\/p>\n\n\n\n How can this level of abject misery and deprivation exist in a country as wealthy as the United States, with a GDP higher than the combined total of the next five largest economies? This is the core question that Desmond seeks to answer. According to him, poverty in America<\/a> persists because it <\/strong>benefits <\/em><\/strong>many Americans to keep a share of their fellow Americans in a state of want<\/strong>\u2014and he issues a moral call to arms to readers to examine their role and responsibility in benefiting from and perpetuating the cycle of poverty<\/a>. <\/p>\n\n\n\n Desmond is a professor at Princeton University, and he\u2019s written a number of books, including the Pulitzer Prize-winning Evicted: Poverty and Profit in the American City<\/em><\/a>. His research centers on inequality and public policy, fueled by his own experience of poverty<\/a>. Poverty, by America<\/em> was published in 2023.<\/p>\n\n\n\n We\u2019ll explore some of the key points raised by Desmond including:<\/p>\n\n\n\n The US federal government defines poverty in 2023 as an individual earning less than $14,580 per year or less than $30,000 for a family of four<\/a>. But, writes Desmond, poverty is far more than just a lack of income and can’t be reduced to a simple math equation. To truly understand the phenomenon of poverty in America, writes Desmond, it\u2019s crucial to explore what it actually feels <\/em>like to be poor<\/strong>. <\/p>\n\n\n\n He writes that poverty is a complex state of being, encompassing a multitude of experiences, emotions, and consequences that go far beyond financial hardship. Desmond stresses that poverty is a wrenching, soul-crushing experience<\/strong>, imbued with physical and psychic pain, representing a loss of freedom, agency, choice, and options for those ensnared by its grasp.<\/p>\n\n\n\n The consequences of poverty<\/a> are dire and far-reaching. It leads to premature death, illness, drug addiction, violence, homelessness, and sexual abuse and assault. It is the common thread that connects America’s social problems, contributing to issues such as lack of education, health disparities, and crime.<\/p>\n\n\n\n Having established the true costs of poverty, Desmond explores why poverty remains such a persistent feature of American life despite the United States\u2019 economy being large and wealthy enough to raise every adult and child above the defined poverty level. He writes that, since the federal anti-poverty initiatives of the 1960s, there has been little sustained progress against poverty rates<\/strong> despite substantial spending on programs designed to combat poverty over the past 50 years. <\/p>\n\n\n\n The stubborn persistence of poverty has given rise to several false explanations for its staying power, including immigration, non-traditional family structures, and a bad work ethic among the poor.<\/p>\n\n\n\n Desmond writes that immigrants are often wrongly associated with higher poverty rates, with immigration levels cited as a reason for the endurance of poverty. However, he notes, this is false: Immigrants exhibit higher <\/em>levels of social mobility\u2014the ability to move up and down the social and economic ladder\u2014than native-born Americans<\/strong>. Moreover, they typically use fewer state resources and services, and states with more <\/em>immigrants often have lower <\/em>poverty rates.<\/p>\n\n\n\n Desmond notes that non-traditional family structures are often held up as a reason for poverty\u2019s endurance<\/strong>. Before we explore Desmond\u2019s arguments for why this isn\u2019t true, it\u2019s worth looking at what advocates of this theory say about the link between family structure and poverty<\/a>. <\/p>\n\n\n\n The argument is that these non-traditional family structures (for example, single parenthood or out-of-wedlock children) contribute to poverty by reducing economic stability. For example, a single mother must balance working to provide for her family with the responsibilities of childcare. Her income is limited because she can\u2019t work full-time. In this scenario, the non-traditional family structure leads to greater economic instability, stretching the mom\u2019s financial resources thin and making it difficult for her to cover basic necessities like housing, food, and healthcare. <\/p>\n\n\n\n Thus, according to this argument, traditional family structures where two parents share both financial and caregiving responsibilities might provide greater economic stability for the family, as they can pool their resources and share the burden of childcare.<\/p>\n\n\n\n However, Desmond raises a few objections to the theory that non-traditional family structures contribute to poverty. For example, he notes the lack of a link between family structure and poverty in other countries and the fact that marriage and family formation are steps people take after they\u2019ve already achieved a certain level of financial stability. Let\u2019s explore each of his objections in detail. <\/p>\n\n\n\n Desmond observes that changes to the traditional married, two-parent family structure aren’t inherently linked to poverty in other <\/em>countries<\/strong>. If it was a universal truth that non-traditional family structures led to poverty, we would expect it to be a global phenomenon.<\/p>\n\n\n\n Desmond writes that America\u2019s key difference is a lack of childcare options, which governments do offer in other wealthy, industrialized nations. This <\/em>is what makes it nearly impossible for single parents to work full-time, meaning they\u2019re unable to reach their full earning potential\u2014making it far more likely that they\u2019ll wind up in poverty. In other words, being a single parent isn\u2019t in and of itself what makes someone poor\u2014being a single parent while <\/em>having to pay for or provide childcare with minimal assistance is what makes someone poor.<\/p>\n\n\n\n Desmond further writes that those who cite non-traditional family structures as a reason for poverty\u2019s staying power get the causal relationship wrong. People aren’t poor because they don\u2019t start families; they can\u2019t start families because <\/em>they\u2019re poor<\/strong>.<\/p>\n\n\n\n According to Desmond, it requires a certain level of financial stability to get married in the first place. When individuals or couples are struggling to make ends meet, they may delay or forgo marriage and starting <\/em>a family because they believe they lack the financial resources to support <\/em>a family. This can be particularly pronounced in communities with high living costs, limited job opportunities, or inadequate social safety nets. In other words, writes Desmond, marriage and family formation is something people do after <\/em>they\u2019ve achieved a certain level of financial stability. It\u2019s a marker of prosperity, not a cause of it.<\/p>\n\n\n\n Desmond observes that politicians often associate poverty with a perceived lack of work ethic<\/strong>.<\/p>\n\n\n\n Desmond also finds this argument lacking. He notes that, during the Covid-19 pandemic, the CARES Act, which among other provisions provided direct cash assistance and expanded unemployment insurance to families living in poverty, demonstrably alleviated poverty rates during the time those benefits were being distributed. He writes that some politicians saw the cash transfers as a negative, believing it disincentivized people from seeking employment if it was more lucrative to stay home and collect government checks. According to Desmond, this is a manifestation of an ideology that the poor must <\/em>be kept miserable and starving\u2014so they\u2019ll be motivated to work.<\/p>\n\n\n\n If it were true, however, that the benefits from the CARES Act were discouraging work, then we\u2019d expect to see an increase in the employment rate once the benefits expired. But, as Desmond notes, this isn\u2019t what happened at all. The expiration of benefits brought no appreciable increase in the employment rate\u2014unsurprising, since during the pandemic, people likely stayed home from work for other reasons (such as to care for children during school shutdowns or out of fear of getting infected).<\/p>\n\n\n\n Since we\u2019ve explored how and why the commonly cited explanations for poverty fall flat, let\u2019s turn our attention to what Desmond argues does<\/em> explain the persistence of poverty in America. He writes that the primary force perpetuating poverty is the non-poor Americans who benefit from keeping their fellow Americans poor. According to Desmond, it’s a story of exploitation and appropriation, where choices made by individuals and society at large contribute to the immiseration of millions.<\/strong><\/p>\n\n\n\n We\u2019ll explore the choices we make to create the poverty of others, including our demands as consumers for cheap goods and convenient services, how and where we invest our money, and where we choose to live. We\u2019ll also explore some of the more specific modes of exploitation, including rent gouging by unscrupulous landlords, the predatory shadow banking system, and housing discrimination<\/a>.<\/p>\n\n\n\n Desmond writes that the choices we make as consumers contribute to the poverty of others<\/strong>. <\/p>\n\n\n\n Many of these choices are related to our demands for cheap goods and our expectations of instantaneous service and deliveries of those goods. The low prices and same-day deliveries offered by e-commerce giants like Amazon or food delivery services like Seamless aren\u2019t possible solely because of technological innovation. Rather, writes Desmond, behind these conveniences is a vast underclass of underpaid drivers, exploited kitchen workers, and un-unionized warehouse employees. Their poverty and exploitation are the hidden costs of our material comfort.<\/p>\n\n\n\n According to Desmond, we also contribute to poverty through our investment decisions<\/strong>. <\/p>\n\n\n\n The most profitable companies to invest in and buy stock in are often those that boost their profit margins by keeping workers underpaid, without union representation, and laboring under poor and unsafe conditions. When you invest in those companies\u2014whether you\u2019re an active stock trader or are just passively and indirectly investing in them through a retirement account like a 401k\u2014you\u2019re both rewarding those companies for exploiting their workers and profiting off that exploitation.<\/p>\n\n\n\n Desmond writes that the places we choose to live and the local housing rules we make are powerful contributors to entrenched poverty<\/strong>. <\/p>\n\n\n\n Wealthier neighborhoods often pass zoning laws that prohibit the construction of multi-family houses and apartment buildings. Because these latter types of homes tend to be more affordable, these policies have the effect of locking poor people out of more affluent neighborhoods\u2014trapping them in poor communities with generational poverty. <\/p>\n\n\n\n These policies also keep the supply of available and affordable housing low. This means they raise the cost of housing and protect the real estate investments of incumbent homeowners\u2014another way that our lifestyle choices increase our material comfort at the expense of the poor.<\/p>\n\n\n\n Desmond writes that one effect of these exclusionary zoning<\/a> policies is to pack poor people\u2014who are disproportionately Black and Latino\u2014into pockets of poverty, often in urban slums. And those urban slums are often a gold mine for landlords who charge higher rents for dilapidated buildings and apartments compared to those in more affluent neighborhoods<\/strong>. <\/p>\n\n\n\n This is because landlords can extract every dollar out of old and inadequate housing stock by dividing them into smaller and smaller apartments for people who have no other option of where to live. The desperation and disempowerment of their tenants is what allows landlords to gouge them this way. Indeed, writes Desmond, in many parts of America it’s more profitable to be a landlord in a poor neighborhood than in a wealthy one. The situation has only gotten worse since 2000, with median rent increasing more than two and a half times\u2014far outpacing inflation and the meager wage increases over that time.<\/p>\n\n\n\n Another way that the economic system preys on the poor is through the system of \u201cshadow banking.\u201d According to Desmond, many individuals experiencing poverty find themselves locked out of the traditional banking system because they lack credit or proper paperwork to open accounts<\/strong>. Consequently, shadow banking options, like payday lenders and check cashers, step in to fill the void. They charge exorbitant rates and fees, effectively taking around $61 million in such fees per day from the poorest Americans. Desmond writes that this essentially amounts to the theft of labor.<\/p>\n\n\n\n And, he notes, it\u2019s a self-reinforcing cycle. The bad credit that comes from poverty forces people to rely more <\/em>on fringe banking options, whose ruinous interest charges drive them even further into poverty. All of this creates a lucrative industry for the lenders.<\/p>\n\n\n\n To truly alleviate poverty, writes Desmond, it’s essential to go beyond providing financial assistance, although that’s undeniably important. He argues that to eradicate poverty, we need to empower the poor, granting them economic and political agency to shape their economic futures.<\/strong><\/p>\n\n\n\n We\u2019ll explore the necessary multifaceted approach: strengthening unions to enhance collective bargaining power, creating paths to homeownership, ending exclusionary zoning policies, and cracking down on welfare for the rich<\/a>.<\/p>\n\n\n\nOverview of Poverty, by America<\/em> by Matthew Desmond<\/h2>\n\n\n\n
Part 1: The Lived Experience and Consequences of Poverty<\/h3>\n\n\n\n
Part 2: False Explanations for Poverty<\/strong><\/h3>\n\n\n\n
False Explanation #1: Immigration <\/strong><\/h4>\n\n\n\n
False Explanation #2: Non-Traditional Family Structures<\/strong><\/h4>\n\n\n\n
1) Non-Traditional Families Aren\u2019t Inherently Poorer Anywhere Else <\/h5>\n\n\n\n
2) Poverty Prevents Family Formation<\/h5>\n\n\n\n
False Explanation #3: Lack of Work Ethic<\/strong><\/h4>\n\n\n\n
Part 3: How Wealthy Americans Exploit Poverty<\/strong><\/h3>\n\n\n\n
The Consequences of Our Consumer Choices<\/strong><\/h4>\n\n\n\n
Investment Decisions and Privilege<\/strong><\/h4>\n\n\n\n
Keeping the Poor Out of Our Neighborhoods<\/strong><\/h4>\n\n\n\n
Rents and Landlords<\/h5>\n\n\n\n
The Shadow Banking System<\/strong><\/h4>\n\n\n\n
Part 4: Empowering the Poor: A Multifaceted Approach to Eradicate Poverty<\/strong><\/h3>\n\n\n\n
Empowerment Strategy #1: Strengthen Unions<\/strong><\/h4>\n\n\n\n